Section A

Six months before going into liquidation, a company transfers a valuable piece of machinery to one of its unsecured creditors to settle a debt, intending to put that creditor in a better position than others. What type of voidable transaction is this?

Under s.239 of the Insolvency Act 1986, a preference occurs if a company does an act that puts a creditor in a better position in the event of insolvent liquidation than they would otherwise have been, and the company was influenced by a desire to produce that better position. The liquidator can apply to the court to reverse this.